I remind the Committee that when the Enterprise Bill was originally going through the House of Lords, where it started, there was no concept of an Institute for Apprenticeships at all. If Members consult the Hansard report of the House of Lords debates, they will see that there was much discussion on the Government Front Bench as to how the whole issue of standards could be developed. At one stage, a Government spokesperson suggested—whether accurately or otherwise I do not know—that some of it might be the province of trading standards officers. I think most Members here who know the way in which local government has had its trading standards officers cut back in recent years would agree that that is probably an over-optimistic assessment.
In due course the Government decided that they needed to set up an arm’s length body, which is why, at a relatively late stage during the Commons debate on the Enterprise Bill—I think it was on Report; I might be wrong—the then Minister, the right hon. Member for Broxtowe (Anna Soubry), tabled an amendment to that effect, which we then debated in Committee. As I said, the Government on that occasion had not got their act together to put a clause down establishing it in the Bill, so we put one down and we discussed it.
I know that no Government likes to take anybody else’s idea, but we were rather disappointed that, when the Bill eventually came out, it was a fairly standard boilerplate structure, if I can put it that way, for setting up any institution of this sort. As we know, this is an innovation that potentially takes quite a lot of working responsibilities away of the Department for Education and the Skills Funding Agency. I think we are now back in the sort of territory that we were in during the Committee stage of the Higher Education and Research Bill. The Minister I faced then was the Minister for Universities, Science, Research and Innovation, but we had exactly the same conversations in that Committee about the appropriateness of a Bill that established the office for students but did not mandate students to go on to that body. I feel a sense of déjà vu, because we are in exactly the same place with this Bill. We will return to the detail of that amendment in due course, but I mention it now only to illustrate the lack of connectivity that there seems to have been, and the relatively late stage at which guidelines for the Institute for Apprenticeships have been produced.
Hon. Members might also remember that the skills plan was originally intended to be in the Government’s academies mark 2 Bill. It disappeared from that Bill at a relatively late stage, when the Government realised that that Bill would be too hot to handle with their Back Benchers. We then had the rather strange situation, again at the very last minute, in which a Government statement about introducing the Bill and laying out its provisions had a little bit tucked in the middle saying, “Oh, by the way, we’ve decided we don’t have to go ahead with the academies issue.” I am not here to talk about academies, but I mention that example because   it is illustrative. The hon. Member for North West Cambridgeshire spoke earlier about things that go wrong in Government. It is illustrative of the fact that the Government felt, at a relatively late stage—largely because of their embarrassment over that Bill, some observers believe—that this set of changes, which we welcome, should have separate legislation.
Whatever the reasons for that, we welcome it now, although I will gently say that it would have been better to have been able to discuss some of this in more detail, and possibly to have the Institute for Apprenticeships itself incorporated in the Higher Education and Research Bill. During the passage of that Bill, as the Government Whip will well remember, the Minister for Universities and Research spoke at length about the importance of higher level skills and everything that went with that, so it seems rather bizarre to some of us that this did not go into that Bill in the first place. We will not dwell on that.
What we want and need to dwell on are the issues relating to capacity. Capacity and time in terms of establishment have plagued the Government ever since discussions about the skills plan and the apprenticeship levy started. Sector skills council after sector skills council, employer bodies and providers have all had queasiness about the apprenticeship levy. We, too, support the levy, but we share some of the severe concerns about its implementation. A long list of organisations, including the Confederation of British Industry and the Federation of Small Businesses, have expressed and continue to feel concern about timing and capacity.
The Minister is quite right that the information about the institute in the policy statement on clause 1 and schedule 1 reflects much, if not everything, that was in the original web document, which I do not think referred to numbers as such. On page 4, we are told that the estimate is that the institute will initially have about 60 staff, with running costs for the next financial year of about £8 million. We are, of course, promised an implementation plan “in due course”. That information was revealed by the current shadow chief executive of the Institute for Apprenticeships and director of both the Skills Funding Agency and the Education Funding Agency, Peter Lauener, when he gave evidence to the Committee on Tuesday. It did not exactly trip off his tongue, but it came out in the end, for which we were grateful, and it is confirmed in the policy statement. Nevertheless, the fact that it has been confirmed only strengthens our concerns about capacity.
It is reasonable to take up some of the points made by the Minister. He rightly spoke of the importance of developing the standards. The policy statement talks about how the institute will
“develop and maintain the quality criteria for approval of apprenticeship standards… at regular intervals, review published standards and assessment plans”
and
“have a role in quality assuring the delivery of…end point assessments, where employer groups have been unable to propose employer-led arrangements.”
It also confirms that the institute will launch in April 2017 as a Crown non-departmental public body. That is a long, worthy and laudable list of aspirations, but aspirations do not grow on trees, and nor does the ability to effect them. They cannot be realised without a strong cohort of people to carry them through.
I am worried about the complete lack of clarity that we have had thus far from the Government on just how they propose to perform all those tasks with a relatively shoestring staff of 60, which is the figure that has now been given. The Minister may come back to me and say, “Ah, but of course we are not taking on the more technical education element for another year,” which seems sensible, but to my mind and, I think, that of many outside observers, that will just muddy the water further. People will say, “There are 60 people. How many people are they going to need to take on the technical side? When are they going to take them on—at what point?” We are going to have a chief executive coming in in April to deal with what sound to me like very fragmentary plans in terms of the board and the chief executive. Peter Lauener said that they hoped to have a conclusion on that before Christmas; the Minister might want to respond to that at some point.
I am not alone in saying this; it is being said across the industry, as the Minister will know. The whole thing smacks of—well, I shall not say the Government making it up as they go along, because I do not think that is true, but it certainly smacks of last-minute add-ons. I remind the Minister what my hon. Friend the Member for Hartlepool (Mr Wright), Chair of the Sub-Committee on Education, Skills and the Economy, said on 2 November, when he—the Minister for Apprenticeships and Skills—and the director of apprenticeships at the Department for Education, David Hill, were being questioned by that Committee. David Hill and the Minister had given details about how many standards there would be and how many employers would be engaged. My hon. Friend said to Mr Hill:
“David, you said, ‘It will take time to scale up the reforms’.”
and he referred to
“the remarkable change in institutional architecture and the need to ramp up apprenticeship numbers”.
We need to remind ourselves that the Government have committed themselves to getting 3 million hopefully good-quality apprenticeships by 2020. I have not yet heard a satisfactory explanation for where that figure came from, but it is a big target, and how far it will be accomplished in the context of the apprenticeship levy and if the Government do not do more than they are doing to satisfy and enable small and medium-sized companies are big issues.
My hon. Friend asked:
“Given the remarkable change in institutional architecture and the need to ramp up apprenticeship numbers, aren’t you concerned, Minister, that you are trying to do two things and that one needed to be put in place before the other?”
The Minister responded, as I would probably have responded on that occasion:
“I think we are doing the things that are needed.”
Well, I am glad that the Minister thinks that he and his Department are doing the things that are needed, but this Committee deserves and will need more specific forensic information about how they are doing it.
Everything about preparation thus far for the institute has felt tentative and improvisatory. I made this point clearly in the oral evidence session on Tuesday, so I  will not go into the detail again, but we have now had two shadow chief executives of the institute, neither of whom were employers even though it was supposed to be employer-led. The first left relatively quickly and  the second, who has great skills and capacities, is still  supposed to be taking this thing through on a two-day week. All the things that the Minister has told us this new great institution will do are being taken through by a shadow chief executive working two days a week.
I genuinely have great respect for Peter Lauener’s capacities and abilities. As I said on Tuesday, he has been a fixture in this area for over 20 years. I doubt anybody knows more than Peter Lauener about the comings and goings of the various systems, and where certain bodies have been buried. If we want someone to make preparations, he is a very good person, but we do not want someone to be doing it on two days a week.
That prompts us to ask who the new chief executive will be and when they are going to be appointed. Mr Lauener gave the impression on Tuesday that he was there to prepare the ground and that some of the detail would be filled in by the new chief executive. Most members of the Committee will be familiar with—and may have personal experience of—setting up new organisations or businesses for which a chief executive or shadow chief executive is recruited. It is not normally done at four months’ notice, with the person who comes into that position being told, “Well, we have all these plans here, but they haven’t all been sorted yet and it is your job to drive them forward.” The Government might think that is a rather unkind description of the process so far, but I do not think it is entirely inaccurate and, frankly, nor do many people in the business sector.
If the Minister wants the institute to be “turbo-charged” from day one—I think that phrase was used at some point—he needs to provide people with a lot more reassurance, as well as make sure that he gets the right person as quickly as possible. We do not know what that person’s background will be and whether they will have to serve out notice, but from day one of their appointment and its ratification, he or she will need to get absolutely all the support that they need. Otherwise, they will arrive in April and it may be that this time an acting chief executive—as opposed to a shadow one—will depart sooner rather than later. I do not think that I am being alarmist. I merely point out the issues of capacity.

Gordon Marsden: Of course, the broad thrust of what my hon. Friend says is right; but let us try to be fair to the Government, and indeed to the officials, including Peter Lauener, who have the slightly unenviable task of bringing the matter to fruition in the relatively short time we now have.
On Tuesday, we discussed not only capacity, but the capability of the people recruited. That was why I asked Peter Lauener where the people might come from. I offered him the opportunity to say how many transfers, if any, he expected. I asked him:
“You talked about the numbers…given the staff reductions in the Department for Business, Innovation and Skills—of course, this is a machinery of government change—do you expect to be moving across or recruiting people from either the SFA or BIS who have previous experience in this area?”—Official Report, Technical and Further Education Public Bill Committee, 22 November 2016; c. 9, Q10.]
Answer came there none. I was merely told about the process for advertising for the key roles of deputy directors. I am sure that, like generals in armies, deputy directors are very important people, but in armies it is non-commissioned officers who are needed to get things moving—the people lower down the food chain who know all the bits and pieces and nuts and bolts. Peter Lauener offered no evidence on possible transfer processes from the Skills Funding Agency and the Department for Education, or indeed whether there have been expressions of interest.
Hon. Members will remember the comments of Ian Pretty, the witness from 157 Group, after David Hughes expressed strong concern about capacity issues. Mr Pretty has significant experience in the civil service and outside it, including as a tax inspector, as he said rather ruefully. He said:
“I would focus on capability as well. You can have 60 people or 100 people in the institute, but have you got the right capability? I would be nervous if the institute was completely staffed by civil servants. If this organisation is about co-creation with the private sector and the education sector, you need people with the capability to understand how business thinks and how business operates. You also need people who understand how the education providers operate. On the capacity issue, in terms of raw numbers you will cite something, but capability is more important.”––[Official Report, Technical and Further Education Public Bill Committee,  22 November 2016; c. 16, Q22.]
I agree. We do not have a problem with the direction of travel of the institute or the long list of admirable things it is supposed to do, but we have a severe problem of confidence about believing that it is anywhere near having the ability to do it. That is the issue that the Minister needs to address.
Perhaps I can drill down into that. The Minister talked about standards and frameworks, so it would be appropriate to ask him a few questions about those. It is fair to say that, although the routes produced by the Sainsbury review and the skills plan have been broadly welcomed—they produced 15 routes, which is a reasonable starting point and, sensibly and reasonably, the Minister has said that that number will be flexible—the broader picture is that the Government are trying to get everyone behind this new institute and its new policies. I will keep coming back to the target of 3 million apprenticeships because, even though it is not in the Bill, it is central to the success of the new institute.
The Library briefing and other comments have made it clear that some stakeholders are quite concerned that the technical routes are not adequate to involve the numbers of people that we need. The former head of the Association of Colleges, Martin Doel, said it was “a concern” that creative arts and sports were out of the scope of the 15 routes. The director of YMCA Awards, Rob May, said that the routes cover only half of the potential occupations. Mark Dawe, the general secretary of the Association of Employment and Learning Providers, said that it estimates that only some 57% of the routes—a very precise figure—would cover all the potential need. In evidence to the Committee on Tuesday, the representative from the National Union of Students said that the NUS believed and had had feedback to the effect that some of the routes were too broad. She cited performing arts as an example of where there needs to be more breakdown. She also made the important point that the routes do not cover retail skills in any shape or form.
I declare a local influence. We are all influenced  by our constituents, and the Minister is proud of his constituency and its excellent FE college. We get to know about the nature of our constituencies. When he visited Blackpool and The Fylde College, I think he went to the Bispham campus, so he would have been in the constituency of the hon. Member for Blackpool North and Cleveleys (Paul Maynard). Obviously that college, as the Minister knows, serves not just Blackpool but Poulton-le-Fylde and the surrounding area. A predominant element—I would not say the dominant element—of employment in those areas, as he will probably know, is retail and tourism based, and it involves quite a lot of part-time work and everything that goes with that. The extent to which service sector skills will be represented in the routes is important because we need to ensure that we have the capacity to get to 3 million apprenticeships.
Another specific point that the Minister might want to take on board—I do not expect him to respond to this today, but it would be helpful if, having considered it, he is able to respond later in the Bill’s passage—is the point made by Shane Chowen about advanced learner loans. The Minister will know that I have been critical of the number of post-24 learners who have taken up those loans. At the last count, only 50% of the £300 million that was made available for advanced learner loans at level 3 for people over the age of 24 had been taken up, which is a great tragedy. Like all Ministers he will want to keep a jealous eye on his budget vis-à-vis the Treasury, but I hope he agrees it is a great shame that £150 million of the £300 million allocated for those students had to be returned to the Treasury unused.
We can argue about why that happened, but the fact is that there a remains a problem with the uptake of advanced learner loans. However, Shane Chowen made the point that his interpretation and understanding was that, in future, students would get an advanced learner loan only for a course that fit into one of the 15 routes. If that is true, it is important, because we have already heard from the other witnesses I mentioned that only about half of the occupations covered by such loans are covered by the routes. These are big issues in the retail, service and leisure sectors.
I have a few words to say about standards. In his opening statement, the Minister quite rightly put great emphasis on the importance of policing the content of standards, and Peter Lauener made the same point in his comments: he said that he wanted to revisit and review the standards at regular intervals. Select Committees have also commented on the issue. When I was shadow Transport Minister, the Transport Committee was particularly concerned that some of the maritime and marine qualifications that needed to be passported over for approval from the Department for Business, Innovation and Skills were being held up for between 12 months and 2 years. The Committee was so concerned about that that it commented on it in its report.
We know that in the past there have been problems not only with the approval of standards but with their development. We are now being told that they are likely to be subject to triennial review. Again, my questions to the Minister are about capacity. If I have my figures wrong, I apologise, but I think he said in evidence to the Sub-Committee on Education, Skills and the Economy that around 400 standards were in development, of  which only 150 had so far been approved. However, we have also heard that up to 3,000 standards may be approved. I ask him straightforwardly: how many standards will there be in total on an ongoing basis, when they are fully active at an individual level? Have he or his Department already determined that there will be an upper limit? End-points for standards are not quite the same as starting points; how many end-points will the Institute for Apprenticeships and Technical Education be responsible for? There are issues around the individual frameworks, so an update on the current state of play there would be welcome.
The Minister may think I am being hard on him for criticising the small numbers, because other authorities involved in the process are not in the institute and are not likely to be. Those are the so-called issuing authorities, which are authorised by the Secretary of State to issue apprenticeship frameworks for particular sectors. I am told that there are some 590 individual apprenticeship frameworks. Will the Minister tell us what their relationship will be to the new institute, as opposed to the Secretary of State?
Colleges and providers deserve clarity on these issues, particularly because of the back story. I could go on about the list of things that have not so far been clarified about the institute, but I will not. I merely emphasise that we would like to be positive and enthusiastic about it; but at the end of the day, this is not about whether the Opposition are confident and enthusiastic, but about what the punters out there think. It is about what the providers, the sector skills councils, the further education colleges and the employers—particularly small and medium-sized enterprises—think. And, of course, it is about all the young and older people who the Minister and I hope will fill the ranks of the 3 million apprentices by 2020. We owe it to all those people to get the capacity and the capability right. Frankly, we need a lot more transparency and information about this issue than we have had so far.

Kelvin Hopkins: It is a pleasure to speak in this very important debate. I support what my hon. Friend has said. I have long been concerned about the problems with apprenticeships. Many of them are insecure and poor quality, and it has been alleged that they are sometimes simply a disguise for low-paid labour for young people. I would like to think that the institute will challenge that and ensure that we have good-quality, secure apprenticeships in the future, so we can build an economy that will compete effectively with those of other industrialised nations, which approach these things in a more rigorous way than we do.
In the evidence sessions, I drew attention to the research that Professor Sig Prais and others produced at the National Institute of Economic and Social Research in the 1980s and early ’90s, which contrasted Britain with Germany, Spain, Italy and other European countries, where the rigour of educating apprentices was so much greater and the quality of the employees who came out of that rigorous experience was much higher. Some documentary television programmes illustrated that, too.
Apprenticeships cannot be done on the cheap. We need much higher teacher-student contact hours, and we should have more rigorous and intensive pedagogic teaching. That is one thing that came out of Germany and other countries, where apprentices get many hours  of rigorous teaching, so they must have, first, good teachers and, secondly, enough of them to do the job. I hope that the institute will look at that, too.
The chief executive of the Association of Colleges drew attention to the low funding per student in further education, in contrast with higher education. I made the point that in higher education in my days we would have one or two lectures a day, perhaps, and a couple of seminars or tutorials during the week, but we were left to our own devices to write our essays and do our maths and statistics projects. The intensity of teaching was much more restricted, although it was high quality and we had some very impressive lecturers. It is not like that in further education, where constant attention needs to be paid to the youngsters, who are sometimes not as academic as those of us fortunate enough to go through higher education.
In 1969, I moved to Luton—I now represent it—which was then a major industrial town. General Motors in Luton and Dunstable employed about 38,000 people. Every year, hundreds if not thousands of young people went into genuine secure apprenticeships. They were taken in at the age of 15 or 16, and they were sometimes pretty raw from school, but after five years of experience in industry, they came out with pretty good qualifications and secure jobs. They would be at different levels. Some would go on to take examinations—ordinary national certificate and higher national certificate—and some would even go on to associate membership of the engineering institutions. It depended on their abilities, but they would look forward to a good life of work within General Motors or other companies, with a good pension at the end of it. That kind of secure manufacturing experience has long disappeared for most people in Luton. The incomes of the people who live in my constituency have declined significantly in relative terms.
Electrolux and SKF, which makes bearings for cars, have declined. Some companies kept a nominal presence in the constituency. Electrolux used to make washing machines and vacuum cleaners. Indeed, my first experience on being elected to Parliament in 1997 was Electrolux getting rid of the last of its manufacturing; it was shipped out to Hungary, where labour was cheaper. We fought to oppose that, but we did not win, although Electrolux kept its office headquarters in my constituency, which pleased me. No doubt, it still makes very fine equipment, but not in Luton. SKF still has a small number of people making high-quality bearings. They are kept only because they make such high-quality bearings; the mass of thousands of people making large numbers of bearings for industry has long since gone.
At that time, not only manufacturing provided a background of secure employment, long-term genuine security and apprenticeships; we had large public sector employers as well. We had local government and public utilities, and they were good bases for training apprentices. It was understood, although not necessarily publicised, that the public sector trained young people who later went out into other sectors and industry after their good five years of apprenticeship there. For example, local authority direct labour organisations trained young people with genuine construction apprenticeships in a whole range of skills, and many of them went off and  set up their own private companies, becoming self-employed with that base of good training. Even so, it was still not as good as the quality of education and training that we saw in Germany and elsewhere.
I return to the contrast with German workers on the shop floor, whose mathematics were sufficiently good to do all their own calculations, design their own products and construct them afterwards—specifically, things such as kitchen equipment—because they had skills. They not only had mathematical skills, but were often fluent in English. They could take a bespoke kitchen plan from England, written in English, to the shop floor, see what needed to be done, understand the English and produce the whole bespoke kitchen, which was then packaged up and sent back to Britain. We should be able to do that, but we could not do it then, and I suspect that we cannot do it now either. We must rebuild our capacity, which is why apprenticeships are so important.
Apprenticeships exist in other sectors as well. They range from high-level apprenticeships in technical subjects down to much more basic employment, but even there, it is important to have long-term experience in the job and to be able to do basic computation and use a language correctly to do the job well. We would not need to recruit quite so many people from eastern Europe in particular if we could do that ourselves with our own young people. It is not right that we should denude eastern European countries of their brightest and best young people. We ought to be concerned about what is happening in those countries, as well as what is happening here.

Kelvin Hopkins: Thank you, Mr Bailey. I was aware that I was straying from the subject. As I said, I taught in further education myself. I have taught a small number of day-release students as well, mainly A-levels in economics, politics and statistics. My experience was not very long—three years or so—but it was a great experience that has coloured my politics ever since. I know the difficulties of training young people.
Another problem that we have had is that, because of the reduction in employer size, there are fewer employees, and it is harder for a small employer to sustain an apprentice without a proper levy system with heavy state subsidy. I think that the levy system is exactly right; I would like it to be more extensive, so that we can give apprentices secure employment with reasonable pay, while they are working and studying. Apprenticeships across the board need to be properly sustained financially and a levy system is the way forward. We are moving in that direction.
I have come across another problem. Small garages, for example, might take on an apprentice as a car mechanic, who might stay there for three years, but then that small garage might suddenly find that its apprentice has been poached by a big garage that does insurance work, which would be very lucrative and much more highly paid. The small garage loses out because it has put a lot of work and finance into training somebody who has been lost to a bigger employer. We ought to be  training more people and giving more security to small employers to ensure that they can sustain an apprentice with similar and appropriate pay for a longer period.
There is a lot for the institute to address. I welcome the fact that we are moving in the right direction, but we must ensure that apprenticeships are high quality and secure, not just because our young people should have the right to good training, education and skills but because our country and its economy needs those people to do well.

Robert Halfon: I could listen to the hon. Member for Luton North for a long time on this subject because he speaks with a lot of wisdom. I have been to the north-east of England to see young people on five-year apprenticeships in companies, doing exactly the things that he talks about.
I will just say that the public and private sectors will be following the same standards. We have exactly the same standards on training and quality, and we are introducing a public sector target from April 2017 in all areas to increase the number of apprenticeships in the public sector: 30,000 by 2020.
I will respond to the points made by the hon. Member for Blackpool South. He is kind about me and it is good to be opposing someone who also cares passionately. I very much enjoyed the visit to Blackpool and the Fylde College. What it is doing is extraordinary, not just for students but for the long-term unemployed.
I will comment on a few things, given that we are about to discuss amendments. The hon. Gentleman said that the levy was an administrative challenge for the IFA. It is important that it has only an advisory role on funding caps. The implementation of the levy is for the Department and the Skills Funding Agency.
The hon. Gentleman talked about the apprenticeship target and how difficult it was. It is worth remembering that there have been 624,000 apprentice starts since May 2015. We have 899,400 apprenticeship participations in the 2015-16 year. That is the highest number on record. Of course, it is a challenge to reach a 3 million target, but we are on the way.

Gordon Marsden: I have not even talked about the relationship of the new institute to the variety of other bodies, such as Ofsted and Ofqual, which were referred to in the evidence sessions, that are circling around wondering what their relationship to the institute will be. I make the point to the Minister that this is not business as usual or something of which he can say, “Well, it’ll be alright on the night,” because it is like playing four-dimensional chess at the moment. I do not know how good the Minister is at playing four-dimensional chess, but he might need to improve his skills if some of the problems that we are talking about come to pass.